Investment Objectives & Philosophy

Achieve a high real rate of return, comprising both income and capital growth, within risk parameters acceptable to the directors; and

Provide access to a diversified portfolio of Australian growth stocks through a single tax-efficient investment vehicle.

The investment philosophy of the Manager, Fisher Funds, is summarised by the following broad principles:

Invest as a medium to long-term investor selling only on the basis of fundamental change in the original investment case.

Invest in quality companies that have a proven track record of growing profitability.

Construct a diversified portfolio of investments, based on our time-tested 'STEEPP' investment criteria

Our Investment Style Fisher Funds employs a process that it calls STEEPP to analyse existing and new portfolio companies. This analysis gives each company a score against a number of criteria that Fisher Funds believes need to be present in a successful portfolio company. All companies are then ranked according to their STEEPP score, to determine how significant their starting weighting within the portfolio will be (or indeed whether they make the grade to be a portfolio company in the first place). The highest STEEPP scoring stock will be our largest holding.

S

Strength of the Business

What is the company's competitive advantage? Is it sustainable? Is the company a market leader? Does it have a dominant position? A strong business is one that can maintain its profit margins by employing a unique strategy or occupying a dominant position in its particular market.

T

Track Record

How has the company performed in the past? Has the company performed under the same management team? Has it grown organically or by acquisition? How did the company react during a downturn? Fisher Funds prefers to buy established companies that have executed well and consistently in the past.

E

Earnings History

How fast has the company been able to grow its earnings in the past? How consistent has earnings growth been? We prefer to buy companies that exhibit secular growth characteristics where they have proven the ability to provide a high and improving return on invested capital.

E

Earnings Growth Forecast

What is the company's earnings growth forecast over the next one to three years? What is the probability of achieving the forecast? What do we expect the company's earnings potential to be? We notice that too many analysts focus on short-term earnings. As long-term growth investors we think about where the company's earnings could be in three to five years.

P

People/Management

Who is the management team and how long have they been in their roles? Who are the directors, what is their history with the company, and what do they bring to the board? What is the depth of management in the organisation and is there a succession plan for the key executive roles? Does the management team own shares in the business and how are they rewarded? Has the board and management exhibited good corporate behaviour in the areas of environmental, social and governance considerations. For us, the quality of the company management and its corporate governance is of paramount importance.

P

Pricing/Valuation

How much of the future earnings growth is already reflected in the share price? Where does the current share price sit in relation to our worst to best case valuation range? A company will generate a higher score where the market price currently reflects little of that company's upside potential.

We sell only when the fundamentals of the company or industry have changed significantly. We do not sell on the basis of share price movements (up or down) and the level of the market is irrelevant to our buying and selling decisions. We are primarily long-term buy and hold investors, rather than chopping and changing, we believe that we can maximise returns by investing in great companies and sticking with them.